November 15, 2023 [Vopak]- AltaGas Ltd. (“AltaGas”) (TSX: ALA) and Royal Vopak (“Vopak”) (XAMS: VPK) advise that another important step in development for the Ridley Island Energy Export Facility (“REEF”) is underway.
Site clearing work, including logging, clearing, and drainage activities are expected to commence in the coming weeks, which will further solidify the project’s readiness prior to reaching a Final Investment Decision (“FID”) that is expected in the first half of 2024.
REEF, located on Ridley Island, British Columbia, Canada, will be a large-scale coastal terminal that will have the capability to export liquified petroleum gases (LPGs), methanol, and other bulk liquids that are vital for everyday life. Following a five-year environmental preparation and review process, extensive engagement with Indigenous rights holders and local communities, and thorough planning, the joint venture is set to deliver a project that will operate with industry-leading environmental stewardship focused on bringing the strongest benefits to all stakeholders. As previously disclosed, REEF has been granted the key Federal and Provincial permits to construct storage tanks, a new dedicated jetty, and rail and other ancillary infrastructure required to operate a state-of-the-art facility. The project will be developed on a 190-acre (77 hectare) site on lands administered by the Prince Rupert Port Authority (“PRPA”) for which the joint venture has executed a long-term lease.
Critical Workstreams Progressing Smoothly for Near-term FID
REEF has made strong advancements across critical workstreams required to reach a positive FID, including commercial, engineering, and partnership agreements. This includes the joint venture having made strong progress on engineering, procurement, and construction work and will be positioned to award several contracts in the first half of 2024. In October, AltaGas entered a five-year transportation agreement with Canadian National Railway Company, which provides the joint venture and its customers cost and service predictability for Ridley Island Propane Export Terminal and the REEF expansion project. This was a critical milestone for REEF to deliver its customers the lowest costs possible for moving propane and butane to the west coast.
REEF will Advance Under the Joint Venture’s Existing Exclusive Rights for LPG Exports on Ridley Island
REEF will be constructed and operate under AltaGas and Vopak’s existing exclusive rights granted by the PRPA to develop LPG, methanol, and other bulk liquids exports on Ridley Island. The provision of these exclusive rights was an important step to enable the certainty required to advance large capital projects through long and fulsome development periods, and ensure developers advance projects with comprehensive environmental and community stewardship.
REEF has Strong Community Support Following Extensive Stakeholder Engagement
Vopak and AltaGas have been working closely with First Nations rights holders and key stakeholders, including the local communities in Northwestern British Columbia, as well as the PRPA, and Federal and Provincial regulators, for more than five years to deliver a project that will operate with industry-leading environmental and community stewardship. AltaGas and Vopak have developed strong relationships with local Indigenous communities through its existing operations, where the partners have worked collaboratively on economic and social development opportunities, including skills training, emergency response preparedness, and other community-identified priorities.
REEF will have Optionality for Alternative Fuels
Following a positive FID, the joint venture will have the option to progress evaluation work on fuels of the future, such as hydrogen, which has growing customer interest in Asia, particularly Japan and South Korea. The joint venture has strong core competencies in this area with Vopak being one of the preeminent third-party hydrogen storage platforms globally, operating multiple terminals across several countries. It is through this deep experience that the joint venture will consider participation in hydrogen exports from Canada with evaluation work expected to be done methodically with a critical emphasis on safety.
REEF Benefits from Structural West Coast Advantage to Asian Markets
With only ten shipping days to the fastest growing demand markets in Northeast Asia, REEF will be able to efficiently connect Canada’s vital energy products to the world. This includes having an approximate 60 percent base time savings over the U.S. Gulf Coast, which requires a minimum 25-day shipping time to Northeast Asia, and approximately 45 percent base time savings over the Arabian Gulf, which requires a minimum 18-day shipping time. This geographic advantage expands when there is significant congestion in the Panama Canal, as is currently being experienced, or when other global shipping pinch points experience disruptions. AltaGas and Vopak are excited to complete the final milestones required to prudently sanction REEF in the first half of 2024 with active site clearing work reiterating the joint venture’s confidence in reaching a positive FID. Vopak and AltaGas thank all stakeholders for the continued embracement and ongoing partnerships as part of this project’s long development timeline. Working with stakeholders and seeking strong partnerships is part of both organizations’ individual and collective DNA and is engrained in how Vopak and AltaGas approach their businesses every day.
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